Feb. 15, 2013
Europe is urging both Japan and the U.S. to strengthen their respective currencies through tighter monetary policies and fiscal stimulus in the case of Japan.
Ironically both the Bush and Obama administrations sought to strengthen the U.S. dollars as shown in the WAIS discussions provided below .
This post goes hand-in-hand with the Perfect Storm installment and other WAIS posts excerpts of which are provided at the end.
MARK-to-MARKET NEWS UPDATES Feb. 15, 2013
In the news update below, please note that Europe is urging Japan and the U.S. to strengthen their respective currencies. Europe believes fiscal policies like QE3 and such causes the weakening of one’s currency.
NEWS:
Europe to call on Japan, U.S. to consolidate public finances
By Jan Strupczewski | Reuters – Fri, Feb 15, 2013
MOSCOW (Reuters) – The European Union will urge the United States and Japan on Friday to consolidate public finances over the medium term to remove what it believes is one of the main risks to the global economy now.
If Washington and Tokyo were to heed the call, it would also help solve the issue of “currency wars” — the weakening of the U.S. dollar and the Japanese yen as a result of monetary and, in the case of Japan, also fiscal stimulus, because tighter fiscal policy would make the currencies stronger.
Finance ministers and central bank chiefs of the world’s 20 biggest economies (G20) meet in Moscow on Friday and Saturday and a rebalancing of the world economy is high on the agenda.
Policies of central banks in most of the leading developed economies to pump money into their banking systems have raised the prospect of “competitive devaluations” as each country tries to boost its exports by engineering a weaker currency.
============ news abbreviated ==============
Euro zone economy falls deeper than expected into recession
By Philip Blenkinsop and Annika Breidthardt | Reuters – 22 hrs ago
Thursday, February 14, 2013
Reuters/Reuters – A German, French and an EU flag flutter over the German lower house of parliament in Berlin January 22, 2013. REUTERS/Fabrizio Bensch
BRUSSELS/BERLIN (Reuters) – The euro zone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of a wretched year for the region.
========news abbreviated =============
Excerpt from the WAIS post dated Jan. 2, 2013 predicting that the U.S. will OFFICIALLY be in recession by March 15, 2013
“The fiscal cliff or the absence thereof and the impending recession are two different and unrelated things. Fiscal cliff or avoiding it is about politics in Washington, while the impending recession is about the economy.
First, the uncertainty of how much taxes and benefits will eventually be paid by entrepreneurs, especially small businesses, is causing the hiring freeze. Without jobs we will be in recession. Bernanke pegs the raising of interest rates to the unemployment rate to encourage the creation of jobs. Otherwise banks and seniors (fixed income earners) will continue to suffer.
Second, as I’ve mentioned before, the EU debt crisis could still impact the US in the first two months of 2013.
Third, the West Coast port strike was put on hold for thirty days starting in December 28, 2012. Don’t be surprised if I’m supportive of the port workers because this is not about their salaries. They can see that ship after ship, mostly from China, go back empty. It doesn’t take a Nobel Laureate economist to figure out that America could no longer keep this one-way trade system any longer.”
From: Seasonal Messages – Economic Predictions for 2013 (Bienvenido Macario, ) Wed, Jan 2, 2013 at 4:19 AM
http://waisworld.org/go.jsp?id=02a&objectType=post&o=74086&objectTypeId=65957&topicId=188
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Excerpts from relevant WAIS posts on Currency Wars (strong/weak dollar):
A.) Global Consequences of a Greek Default (Bienvenido Macario, ,06/22/11
“There’s a lot of uncertainty with how the European debt crisis will play out. How the next IMF Director will handle the debt crisis in Europe is one factor. The two leading candidates for IMF Chief will meet with the executive board this week. Mexico’s Agustín Carstens met with Treasury Secretary Tim Geithner, while France’s Christine Lagarde will meet Geithner this week.
I’m curious as to why the IMF candidates are not meeting with former No. 2 persons of IMF like Stanley Fischer? I think they should meet with former Federal Reserve chairmen Paul Volcker, Alan Greenspan, incumbent Ben Bernanke and the US Treasury Secretary Tim Geithner.
It doesn’t make sense to meet with Tim Geithner, who may or may not be there after 2012. He is not with the US Central Bank (Federal Reserve Bank).
From: Global Consequences of a Greek Default (Bienvenido Macario, , 06/22/11 5:08 am) http://waisworld.org/go.jsp?id=02a&objectType=post&o=65900&objectTypeId=60150&topicId=198
B.) “The Perfect Storm” as posted on WAIS Oct. 18, 2009 http://www.nedmacario.com/perfectstorm-as-posted-on-wais-23-oct-2012/
“BM: I’m not sure if the major players in the (US) financial system support the Bush and Obama administrations’ efforts to compel China to properly price their undervalued Yuan against the US dollar, among other currencies. Whether these players were also in favor of a “strong dollar” that both the Bush administration and Treasury Sec. Geithner were seeking is not clear. As of last week the US Treasury quietly abandoned the pursuit of a “strong dollar” and the stock market rose.
I am not in favor of a weak US Dollar, but currencies and liquids behave exactly the same: water seeks its own level. The components of the Perfect Storm Syndrome-Global Edition are:
The components of the “Perfect Storm Syndrome”-Global Edition are:
1.) High oil prices;
2.) High interest rates &
3.) A strong dollar (currency).
While the domestic components of the “Perfect Storm” contagion are: 1.) health care (high costs); 2.) retirement/pension (lack thereof) & 3.) education (this is the biggest challenge of all as the strong dollar is in the global edition).
In my opinion, the root cause of the present financial crisis, in one word, is “globalization.” I have never seen any financial analyst offer an assessment on the financial market status from a global perspective. They all offer observations from the G-7 perspective, as if the rest of the G-20 nations do not count.
In 2002 in the aftermath of Enron, Paul Volcker made very sensible suggestions but the US Congress decided to “perform for the media and their constituents” and enacted the Sarbanes-Oxley instead. Of course we all know what Bernie Madoff did. And so with SOX notwithstanding, how come Bernie Madoff managed to pull a huge ponzi scheme?
From: re: Capitalism and Democracy (Bienvenido Macario, Philippines/US)10/18/09 7:36 pm
http://waisworld.org/go.jsp?id=02a&objectType=post&o=45697&objectTypeId=39947&topicId=92
C.) re: US: Obama One Year after Elections (Bienvenido Macario,) 11/06/09
“Pres. Obama should be credited with stopping the recession but at the cost of making Washington DC the new financial capital of the US and at the expense of Wall St. Nothing really wrong there, except the US is has a market-based economy. When the financial and political capital of a country is one and the same there will soon be an inefficient economy.
Now who will lobby for the entire US economy? Fannie Mae, Freddie Mac, World Bank and the IMF are the worst examples of “too big to fail, too big to be wrong” corporations and institutions.
Treasury Secretary Tim Geithner is like a typical Filipino politician, who says one thing and does the opposite. He speaks of “strengthening the US Dollar” and then throws away billions of taxpayer money on hopeless cases like the “Gang of Four” (IMF, World Bank, Fannie and Freddie). He should explain this conflict between his goals and policies to US taxpayers. He should answer to his employer, the American people.
JE comments: I went to college with Timothy Geithner (he graduated three years before me; we never met). Tim: if you’re reading these lines, I vote for a strong dollar! And Go Green!
Bienvenido Macario writes that national economies become inefficient when their political and financial capitals are one and the same. This is the rule for the overwhelming majority of countries–Russia, France, Japan, Mexico, the UK. In Europe, Germany and Switzerland are the only two countries with separate financial and political capitals.
Elsewhere in the world, we have the examples of Australia, Brazil, (possibly) China, India, and the US. Does either model necessarily lead to inefficiency? New York City, interestingly enough, isn’t the political capital of anything–not even the state of NY. But New Yorkers will be quick to tell you they are the center of the universe.
From: re: US: Obama One Year after Elections (Bienvenido Macario, Philippines/US) Fri, Nov 6, 2009 at 2:05 AM
http://waisworld.org/go.jsp?id=02a&objectType=post&o=46195&objectTypeId=40445&topicId=44
=== End of US Will Be In Recession by March 15, 2013 M-to-M Feb. 15, 2013 ====
Bienvenido Macario, Feb. 15, 2013